Oracle is pricing itself out of Amazon’s cloud

Oracle may believe that upping the cost of using a competing cloud will help it win, but the opposite is more likely

Oracle is pricing itself out of Amazon’s cloud
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Guess what? Oracle is raising prices again, this time on enterprises that choose to run Oracle software on Amazon Web Services.

Oracle’s previous licensing agreement recognized that an AWS virtual CPU is a single thread of a core that runs two threads. Therefore, each virtual CPU was counted as half a core.

But Oracle's new cloud licensing policy says an AWS virtual CPU is now considered a full core unless hyperthreading is enabled. That doubles your cost for what you've been doing all along.

This price doubling comes as enterprises are migrating en masse to the cloud. Many enterprises have no choice but to pay the higher Oracle prices, at least for now.

Although some enterprises are jettisoning Oracle's pricey licenses as they move to the cloud, many cannot because in the past they used proprietary Oracle features, such as stored procedures and triggers, that tightly couple their critical applications to Oracle. As a result, they're stuck with Oracle's technology -- and higher prices -- unless and until they rewrite major portions of their software.

I’m not sure why Oracle has doubled its AWS virtual CPU pricing, other than to steer customers to use its own IaaS platform rather than migrate to AWS. Although Oracle's cloud is far behind AWS's, doubling the price of using AWS may stall enterprises' migration enough to give Oracle time to get its own cloud act together. 

This is not a new story for Oracle customers. Oracle has long played hardball on licensing and costs. This latest action presents enterprises two choices:

  • Enterprises will suck it up, paying the full freight for running Oracle on AWS. Some will have no choice since they've locked themselves into Oracle technology but need the benefits of moving to the cloud.
  • Enterprises will consider this the straw that broke the camel’s back and suck up the cost of finally leaving Oracle to get out of what for many has long been a bad relationship. In other words, they'll move their data to another cloud-based database, such as RDS or RedShift on AWS, and rewrite their applications accordingly. In fact, AWS is counting on it.

Who loses? Oracle, for sure. I believe that Oracle is committing market suicide by hurting those enterprises still loyal to its technology. Were I a CIO, I would be looking for other options now.

But enterprises lose as well. For many, the likely outcome is that they won’t move Oracle workloads to any cloud, due to the cost. That will putting them at an increasing disadvantage over time. Thanks, Oracle.